Foreclosing Vacant Properties

Posted in Bankruptcy & Creditor's Rights

What do you do if the property you are foreclosing is vacant?  Signed into law on December 3, 2012 and effective April 1, 2013, the New Jersey Legislature passed N.J.S.A. §2A:50-73 which provides for "vacant and abandoned" properties to be foreclosed in an expedited manner.  For a property to be foreclosed in this manner, it must be proven by "clear and convincing" evidence that the property is vacant and has been abandoned.  The property will be deemed abandoned if the court concludes that the property is not occupied (by a tenant or mortgage holder) and at least two of the following conditions exist:

  1. overgrown or neglected vegetation;
  2. the accumulation of newspapers, circulars, flyers or mail on the property;
  3. disconnected gas, electric, or water utility services to the property;
  4. the accumulation of hazardous, noxious or unhealthy substances or materials on the property;
  5. the accumulation of junk, liter, trash or debris on the property;
  6. the absence of window treatments such as blinds, curtains or shutters;
  7. the absence of furnishings and personal items;
  8. statements of neighbors, delivery persons, or government employees indicating that the residence is vacant and abandoned;
  9. window or entrances to the property that are boarded up or closed off or multiple window panes that are damages, broken and unrepaired;
  10. doors to the property that are smashed through, broken off, unhinged, or continuously unlocked;
  11. a risk to the health, safety or welfare of the public, or any adjourning or adjacent property owners; exists due to acts of vandalism, loitering, or criminal conduct, or the physical destruction of deterioration of the property;
  12. an uncorrected violation of a municipal building, housing, or similar code during the proceeding year, or an order by municipal authorities declaring the property to be unfit for occupancy and to remain vacant and unoccupied;
  13. the mortgagee or other authorized party has secured or winterized the property due to the property being deemed vacant and unprotected or in danger of freezing;
  14. a written statement issued by an mortgagor expressing the clear intent of all mortgages to abandon the property; or
  15. any other reasonable indicia of abandonment.

On May 23, 2013 the Supreme Court of New Jersey supplemented and relaxed Court Rule 4:64-1 to provide for these types of properties to be expeditiously foreclosed.   Additional steps were established for entry of a residential foreclosure in this manner such as the Plaintiff must prove that a process service made two attempts to serve the mortgagor or occupant at the residential property at least 72 hours apart and at different times of the day.

The notice for entry of default judgment and notice of tenants rights are not required.  Rather the court may enter final judgment on the return date of the order to show cause on sufficient proofs.   If the residence is occupied or if defendant files an answer, enters an appearance or otherwise challenges the foreclosure in writing, judgment cannot be entered.

This process may not be used for buildings under construction, seasonal or properties involved in ownership disputes because there are not considered vacant or abandoned.  Sheriff sales for properties foreclosed in this matter must be completed within 60 days of the issuance of the writ of execution.  Using this method in certain situations can be very effective if the right property is involved.